Interview with Geoff Simmons

Geoff Simmons is an economist at the Morgan Foundation, the Deputy Leader of the Opportunities Party, and a candidate in the Wellington Central electorate. According to the Opportunities Party website he enjoys playing in a samba band, something we didn’t ask him about, but we did talk about his background, radical centrism, housing, and transport. A recording of this interview will be broadcast onSalient FM.

As a new candidate, could you give me a run-through of your background before the decision to stand for the Opportunities Party in the Mt Albert by-election earlier this year and as candidate in Wellington Central?

I’ve been pretty lucky. I grew up in a middle class household, with two teachers as parents, and they raised me to be curious and interested in society. Neither of them were economics teachers but I naturally gravitated to that subject. I tried a few different degrees at university but kept changing and went and did some travel for a couple of years. I went to a developing country, Egypt actually, and that’s where I was like wow: we worry about the environment, society, equality, and stuff like that, but these people are just worried about getting food to feed their kids for today. So that’s when I realised economics was what I’m really interested in. I came back, finished an economics degree. Worked in Treasury for four years, worked overseas in different governments and consultancies and NGOs for a few years.

I came back and got a job with Gareth at the Morgan Foundation, his charity. I’ve been running that for the past few years. We were really looking at how to solve the issues that face New Zealand and I, like Gareth, got sick of offering this advice but no one taking it up — all the politicians saying it’s too hard. The solutions are pretty easy but what’s hard is having the public conversation. So we thought we should offer the public that choice and that’s what led to setting up the Opportunities Party.

The Mt Albert by-election was pretty interesting. There was this opportunity, a weird situation where Labour and the Greens were running — if the Greens hadn’t run we wouldn’t have run because it would have been a joke — and National wasn’t running, it was an opportunity to get our policies out there. I grew up in West Auckland and had an affiliation to that area. I said to Gareth, I can have a crack if you want, if you want to get us in the mix.

Politically it makes sense to get your ideas out there before the general election in a forum like that.

Yeah, I think it has helped build momentum for us. As we got closer to the general election I was looking at whether I should stand in Wellington or Auckland. We had such high quality candidates come forward in Auckland, particularly in Mt Albert, so it made sense for me to stand here — which is where I live, which is nice.

Could you describe what the Morgan Foundation does, and what its kaupapa is?

It’s really all about generating ideas that will improve the wellbeing of New Zealanders. Generally we talk about economic growth as a society but we as economists don’t actually use that as a metric, we use a much broader metric of wellbeing. What ideas could make all New Zealanders better offwas really our kaupapa.

Do you think it would be fair to call the Opportunities Party the political force to push the ideas?

Yes. At the Morgan Foundation we were coming up with these ideas and the politicians would go, “the public would never vote for that.” And we said, well okay, let’s test that.

In an interview, this was during the campaign for the Mt Albert by-election, with Jenée Tibshraeny for interest.co.nzyou described the approach of the Opportunities Party as “radical centrism.” Could you unpack that concept?

There are two parts to coming up with policy — there are your values and there is how you achieve those values. In our view, the values of the Opportunities Party are very middle New Zealand — centrist. In that we want equality of opportunity, not equality of outcomes. We want everyone to have a fair go to be able to achieve their potential. New Zealanders have this thing where we want everyone to have a fair go, but beyond that it’s up to you and your hard work to get ahead. And those two different ideas are epitomised by Labour and National as their values. In our major parties you can see those two values and we agree with both of them.

The radical bit is what it would actually take to achieve those values, and, when you look around the world, a lot of the things we’re suggesting are not that radical. They’re radical for New Zealand, given the policy malaise we’ve been stuck in for the 33 years since Rogernomics. But looking around the world a lot of the things we’re talking about are just best practice from other countries. We’re radical for New Zealand and we’re centrist in our values.

A term that is thrown around a lot, by people describing the party, and members of your party as well, is that your policy is “evidence-based.” Something I’ve wondered, is do you consider evidence to be ideologically determined? Can you separate it from values and view it in vacuum, say?

No. Any scientist worth their salt (and good economists should as well — economics is a social science) will say what they are trying to achieve before they tell you the evidence. You have to have a pretty clear idea of what you’re trying to achieve, and then it’s a question of, what’s the best way to get to that outcome. In determining what you’re trying to achieve, obviously there are values wrapped up within that. You can’t have an evidence base without values.

So your key value would be equality of opportunity?

You can think of it as fair go and prosperity. So equality of opportunity kind of brings those two things together. Give everyone a good start in life and then let them succeed to the best of their abilities.

It’s a comparison that’s made a lot, but the Green Party would also say they draw from evidence, but they come from a different value set. How would you differentiate the Opportunities Party from the Green Party?

I would say our values are pretty similar, particularly around the environment we want to achieve the same things. Making sure that kids have a fair start in life, we definitely want to achieve the same things there. Let me give you a conceptual answer and then an example of that. The conceptual answer is that I’d argue they’re not always evidence-based. There is a certain amount of dogma in what they’re trying to do, don’t get me wrong, James is very good, I also have a lot of time for Julie-Anne Genter — they’re both incredibly intelligent people. The Greens have a history of being a left-wing party and they carry a lot of baggage from that. There are certain ideas that the Greens wouldn’t currently touch because they carry that dogma with them, even if the evidence says that they should be doing that.

A good example, there’s two really. The Greens are strong on the environment, just like we are, but their solutions tend to be focused on regulation because they don’t like using market mechanisms (carrot and stick incentives) and that’s just from their history as a left-wing party — they don’t trust them. Whereas the evidence is very clear, from the OECD and others, that you need both. You need regulation and market mechanisms, because regulation takes out the worst offenders and the market mechanisms provide the carrots to get everyone improving.

Another example is around their tax reform. The Greens are a big fans of a capital gains tax excluding the family home, and I understand the politics around this. What we’re proposing is an annual tax on all assets and the idea of paying a tax on your family home is an anathema to New Zealanders; some people get very upset at even the concept. But these things are quite common overseas. South Korea, various countries in Europe, have a tax very similar to what we’re proposing. So the Greens wouldn’t want to propose that, as it is political dynamite, but actually there’s no evidence that a capital gains tax excluding the family home will achieve anything. There are plenty of other countries around the world that have rampant housing markets and have a capital gains tax excluding the family home — Australia, the US, the UK. On that particular issue it’s somewhat of a tokenistic response as they think it’s all the electorate can handle — it’s that political expediency thing.

It may well be that we don’t get elected because our ideas are too unpalatable to people, so I can understand where the Greens are coming from on that. The famous line, I forget who said it, is that knowing what to do is pretty easy, the hard part is getting re-elected once you’ve done what you know you should do.

The Opportunities Party has been self-labelled as anti-establishment by Gareth Morgan. In a previous interview we had with him, he suggested that “the main thing with establishment parties [in this category he included National, Labour, NZ First, and the Greens to an extent] is that they are filled with career politicians. So the priority for those people is keeping their job. So that drives them to (it’s how trustees act actually) do as little as possible because we don’t want to disturb the voters.” Say the Opportunities Party did gain 5% of the vote, or did win an electorate, and entered parliament, would you be sticking around as a candidate for the election in 2020?

Our kaupapa is that once our policies are implemented there’s no need for us anymore. Realistically, we’re not going to get even a fraction of what we are proposing implemented in one term of government — there will still be a need for the Opportunities Party in 2020.

Gareth is trying to make something that can continue on; he doesn’t want to be involved forever. After this election we have to create a constitution, work out how we involve our members in developing policies, work out how to select candidates, work out how to select a leader — all that cool stuff. That’s going to take the time between now and 2020 to develop; we didn’t have time to do that before this election. So there are a whole lot of caveats there as to whether I’d even be welcome to be involved in the party, you can’t choose these things. I’m passionate about policy, I’m passionate about making a difference to New Zealand, and if I can help then I will. If I end up a bit like Andrew Little where I’m hindering more than helping, I’ll gladly step aside.

In a hypothetical world, say all of the Opportunities Party’s policies were implemented — the country would still have to be governed if we continue to have a parliamentary democracy. Would the Opportunities Party take on the role of governance? Plus there are always new issues that will require policy provisions.

I think there is always a role for a cutting edge party, and I think that’s why Gareth said the Greens to a certain extent, because between 10–20 years ago that’s the role they were playing. Whereas in more recent years they’ve been playing it more safe, as they became a bigger, more mainstream party. I think there is always that role within a parliamentary system; whether or not we’re the best to play that role is a big question.

The establishment parties are very good at dealing with and managing things on a day to day basis, but they’re terrible at looking long term and seeing what issues are coming and adapting for them. Our fourth policy “Democracy Reset” is trying to get government (with a small g, not National or Labour, as those politicians are never going to look long term) institutions right. If you make sure there are people within government that are thinking long term, whether that’s an upper house, or a parliamentary commission, whatever. Some of the things we see overseas, some of these institutions, have built into the system people thinking long-term, saying, hey, have you noticed this iceberg we’re heading straight toward? I think that if you can build on the institutional frameworks to do that then perhaps we don’t need a political party.

What is the fundamental change of the “Democracy Reset” policy?

There are four aspects to it. First, a constitution, which embeds our rights, the rights of the environment, the Treaty, and honours it. The second part is a constitutional authority, that’s what I was talking about before, having a body within government that is making sure that constitution is upheld and is looking forward to what’s coming. The third part is making sure the public service is open and transparent, so that people are fully informed. The fourth part is making sure that people are fully informed by civics education and having public interest media.

In an interview with Wallace Chapman for RNZyou were asked about what you would say to Roger Douglas, and said “he did a lot of good stuff in those six years as well as some of the negative stuff.” You said the biggest problem was that while “he simplified our tax system… the big thing that he left out was housing and land.” You suggested they were loopholes that were driving rising inequality. Could you explain what you meant?

Some assets get taxed more than others. If you put your money in the bank then you get interest on the money and you pay tax on it, and that’s all done automatically. Once you’ve got that interest and paid that tax you can use that money for paying your rent, whatever. Whereas if you take the same amount of money and buy a house you’re basically paying rent to yourself and you don’t have to pay any tax. That’s the big loophole known by economists as “imputed rental”. It’s driving capital gains which, again, are untaxed — another loophole.

Businesses can use these loopholes to minimise their tax bill as well. It’s not just individuals that are doing this, it’s businesses too, and that’s where you’re talking serious money.

How does that work exactly?

They have massive assets that they’re getting a return on, but they are able to arrange their affairs that they can shift their money where there is very little taxation.

Like here, in New Zealand?

For physical assets. The big loophole within New Zealand is physical assets and that’s why a lot of rich people want to buy land here, because it’s not taxed. Coca-Cola Amatil is perhaps the easiest example to understand. They manufacture Coca-Cola in New Zealand and sell it around the country and make money. But they’ve got to buy the “secret Coca-Cola formula” from Coca-Cola based in Bermuda, in a tax haven. So they’re buying the “secret formula” from Coca-Cola in a tax haven, and it just so happens it’s really expensive for them to buy. You’re minimising your profit here and you’re shifting it overseas to where it’s not taxed.

A similar idea applies that if we can tax assets, because intellectual property (IP) is an asset, then it becomes a lot harder for Facebook, Google, Uber, and Coca-Cola, etc. to avoid tax in New Zealand.

It’s Opportunity Party policy. All assets have to pay as much tax as a bank deposit, is the basic way of thinking about it. Some assets are already paying that kind of tax, so no problem, they don’t pay any more. But if you’re not paying at least as much tax as you would if you had it in a bank deposit, why don’t you have the money in a bank deposit? Are you telling me that that asset is not generating any revenue, any value for you? Because it clearly is, it’s just generating non-taxable value for you.

As part of the Wellington Central campaign you’ve been in quite a few debates. Have you found that your presence, as a representative of the Opportunities Party, has shifted conversations around policy?

Yeah, I’ve privately (I won’t name names here, because I respect privacy) talked to candidates from other parties and they enjoy what the Opportunities Party is doing. It’s broadening the playing field for debate. Normally we have this really narrow debate between right and left, and actually their ideas are pretty similar. This election is a great example. Do we give the money back to you in tax cuts, or do we spend more on health and education? But it’s always these little amounts of money at the margins. No one is saying, how do we collect tax? How do we spend money on health and education? How are these systems even set up? The really big issues. We’re trying to open the debate wide open.

In the previously mentioned interview with Jenée Tibshraeny for interest.co.nz, you also said we’re in a “new phase, where left and right are disappearing, and politics all around the world is changing.” Given the recent UK election where you had a different kind of left-wing Labour emerge, I wondered if that goes against what you’re saying about the disappearance of left and right?

I’ve got a lot of friends in the UK, I lived there for a few years. A lot of my friends think that Jeremy Corbyn is “batshit crazy” but voted for Labour anyway, because they disagree with the Tories so much. This is the trouble with the old Westminster first-past-the-post system, you don’t really have the opportunity to show your true preference. You’re much better, when it’s a two horse race, to pick which of the shitty horses you’re more happy riding.

The second point I’d make is that one fact that a lot of people don’t dwell on is that not only did Jeremy Corbyn increase the Labour vote, Theresa May got the highest ever Conservative vote in recent history. What’s the driver of that? It’s polarisation — Labour moving solidly to the left motivated a lot more Conservative voters to vote than normally would. As things polarise there is a risk of extremism arising, I think we’ve seen that in the US, which I can understand because they have big problems that need solving. What we’re trying to say is, if we don’t get radical now, things are going to get extreme, and you will start to see this polarisation of society. That’s why it’s important to be more radical now to head that off at the pass, so we can keep society reasonably together.

We’ve been talking a lot about things that are away from student issues. But given we mentioned aspects of this earlier, what changes does the Opportunities Party propose to housing policy that would benefit students?

As I mentioned, we want to tax assets, and housing is included in that, which will stop the speculation we see now and will hold house prices. It won’t make housing affordable overnight, but over time it will make housing affordable.

In the meantime we have to do more to protect the rights of tenants. One thing I should point out about that tax reform [we’re proposing] is that it benefits renters. What we’re doing is taxing assets and giving it back in cuts to income tax. 80% of people will be better off, and that includes the 50% of New Zealanders who are renters — all renters would be better off under that tax change. In the meantime we have to take care of the rights of renters, so long-term tenancies, warranties of fitness on rental properties, greater investment in insulation and efficient heating — all of those things are part of our policy, which was released today, “Houses not Homes”, our tenancy reform. Those are the major housing things which will benefit students.

Also important for students is transport, something you’ve been working on. In terms of Wellington Central, I wondered if you had any general thoughts about what should be done to make it fairer for students?

We do agree with the Green Party policy of a green card funded from the National Land Transport Fund. The issue with the fund at the moment is that it all goes into roads, and we think that it should be looking at projects right across public transport, and choosing the ones which have the best cost-benefit analysis. If they were to do that, then free off-peak fares for students would just make sense because it’s keeping traffic off the roads. It’s kind of impossible to promise certain projects, but if we were to run our transport in that way there would be much more invested into public transport. I personally think a green card, or off-peak fare for students, makes a lot of sense.

Just on students, our Unconditional Basic Income (UBI) is our main policy for young people. There is a third of young people who don’t go to any form of tertiary education and we want to support everyone to pursue their goals. I used this example when I talked to bFM; I think some of the best journalism in New Zealand comes out of places like you guys, and we should be supporting you to do that because I know a lot of you are volunteering. That’s the idea of giving everyone $200 a week, no questions asked, it allows you set out your own goals and work out how to pursue them. I have a lot of mates out at Weta and none of them went through formal education — they just turned up and said, can I sweep the floors and copy what Barry does. There are many paths to the top of the mountain.

We talked to Gareth about the UBI, but the youth one is different?

Yes, it’s new. It’s our alternative to Steven Joyce’s tax cut package. The idea is that we’re phasing this in over time. If we could reform the tax system in the way I set out to you before, that would enable us to roll the whole thing out a lot more quickly. Until the tax reform is done, it’d take a few years, you can’t introduce a UBI across the board. That’s why we’re starting with 18–23 year olds.

It wouldn’t take money away of student loan living costs, or student allowance, or anything like that?

The things it would be instead of are the unemployment benefit, job seeker support, and student allowance. Everyone is getting $200 a week, student allowance is less than that if you’re under 25. Even if you’re on student allowance you’d be better off as this is $200 after tax. And everyone gets it regardless of what you’re doing, whether you’re going to university or not, whether your parents earn a certain income, or have money in a trust — everyone gets the money. The student loan will remain, so of course people can borrow for tuition and living costs on top of it. It’s more generous than at the moment.

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